TOPIC: Arcade?

We have a small room adjacent to the lobby. I was considering some coin-op video games. Anybody have experience with these things? Is it profitable? Just checked out Ebay and you can easily spend hundreds or thousands on them. I'd, ideally like a room with six or eight of them to help make it more of a destination rather than a side business. I talked to a video game vendor and his deal is he will supply the games but charges 60% of the take. Can you make money doing this, or will it take too long to cover your initial investment?

Unless you can find a really good deal on some used machines, I wouldn't outright buy any. Because, like anything else, they break and you have to repair them too. I like the idea of an outside vendor doing it. Thats what I would do, basically you have no expense, you are just using unused space. Make sure the games are good/current games that people want to play. 60% seems fair, 50/50 split is very common, usually more means they have some games that give away prizes or something of value.

Speaking as someone who's had 33 years in the coin-op games business, I've got some things to mention.

If you own your own games, you are responisble for cleaning, repairing, insuring, and licensing your games. Games get dirty, kids break into them, lights burn out, monitors crap out, somebody gets shocked or cut while playing the machine, or some city/county/state inspector comes in and asks where's your licenses. Don't forget that some localities require sales tax to be paid on the income from the machines and may also limit the number/types of games.

Here in Washington state, crane/claw games and any other types of machines commonly classified as "redemption" are classified as gambling devices and regulated by the Washington State Gambling Commission. You must submit to background checks and each machine requires a yearly $1,000 per machine license! Oh yes, ANY coin operated machine in this state must pay the state sales tax on all the money taken in at each collection (gross revenue).

If owning your own games, also keep in mind the fact that you need a few new/newer games every so often to keep the interest up in the location. People get tired of seeing "the same old games" all the time. Brand new games now often cost over $5,000 each!

If you have a local game operator (in the Yellow Pages under "Amusement Devices" ) provide the games, you'll probably have to sign a contract with said operator since the operator is taking all the risk. The operator provides the games (usually a mix of newer not brand new), services the games, rotates games occasionally, pays for the licenses (unless local ordinances state otherwise), carries insurance, and collects the money in a timely & documented manner. The percentage the location gets depends on the operator, the type of equipment (and how new it is) and how much the licenses cost. Sometimes you can get a 50/50 split, but many operators are going to a 60/40 (60% to the operator) because he has to pay his route collectors, service persons, gasoline & vehicle maintenance (yes liftgates do break). Going with a local operator generally costs you nothing and you make money in return. if you sign a contract, that operator gets exclusive rights to game placement/operation at your location. That means only that particular operator can place machines in your location and you are prohibited from contacting/engaging any other game operators to place equipment in your location. This is common industry practice.

Many theater gamerooms do make money, but remember that every location is different. Some make lots of money, some do ok, while others don't make a dime. Competition from other nearby arcades, mini-golf courses, go-kart tracks, or other theaters may take away from your revenue. For instance, the gameroom I service at a national chain theater did great the first three months the theater was opened (this theater is only two years old) but now does poor business because a competing theater (Regal Cinemas) opened up a bigger theater across town and it has a bigger gameroom.

Here are some more specifics. We are in a very small town (no stoplights in the whole county) with a population less than 1500.

The vendor is only willing to put in about three games. I think this will be too few and nobody will venture into that room for only three games. I would like to get upwards of six.

I have seen some multi-game units (48 games, one machine?) and some interesting single play games in the $400-$800 range on Ebay. These are not new games, but are somewhat affordable. Don't know what shipping is but it can't be cheap.

Find a distributor in a larger city in a resonable driving distance and see about buying the games from them. You can rent a U-Haul truck then to get them back rather than pay for shipping from someone on EBay.

Owning the games themselves will require a cash outlay. Purchasing the games, sales tax on the games, shipping charges (if bought on ebay) can be pricey. Shipping games to you does not guarantee that they will arrive in undamaged condition ready-to-play. I've seen some where something has broken loose and bounced around thus busting the monitor or smashing the game boards. Don't forget to buy insurance for the games once you have them setup. Be sure to buy security bars and good quality padlocks to keep kids from prying them open and stealing the money. Order keyed alike coin door locks so you don't have to hunt around for all the keys to open the machines for service/collections.

Double check with city, county, and state revenue offices and business license offices as to the licenses you need to buy not only for each machine, but just to do business as an "amusement machine operator" .

Look in the Yellow Pages of the nearest large metropolitan cities under "Amusement Devices" for companies with the word "distributing" or "distributors" in their names. These are the companies that sell new and used games as well as sell repair parts. Typically they have big showrooms too. Many times they will also have a finance department setup to help you buy the machines.

By far the amusement machine industry is financed through Firestone Financial. Firestone has special financing for amusement games especially for particular game manufacturers like Touchtunes, Rockola, Raw Thrills/Betson, and Merit Industries.

Games vary in size and weight so be sure you can fit them through your doors and you can get the amount of machines you want to fit in the room and still allow player comfort as well as be able to scoot the machines out for service (which requires access to the back of the machine usually). Generally, any game with a 25" or larger monitor weighs quite a bit. Sit down drive car games take up alot of room.

Make sure your game room is fully visible to your staff to prevent vandalism/breakins/horseplay/hanging out.

I have some games in my location that Ken helps to service. Having previously owned my games, I can say that I'm completely satisfied with the present arrangement. As Ken says, the tradeoff is that maintenance and rotation is no longer your problem.

The games I had were older ones. Rotation isn't as big a deal here as it might be at an arcade or formal game room. The maintenance was much more important. I had a pinball machine that did pretty well, but was a headache to keep up. I got 100% of the income, but the game was down more often than it was up... mainly because I just didn't have the time to get to it.

Anyway... my story may not fit all situations. However, if I had to go back to owning my own, I'd probably just pull them all out.